E12-34B. (Learning Objective 4: Analyzing profitability) Compute four ratios that measure the ability to earn profits for Collins Decor, Inc., whose comparative Income Statements follow:

Additional data:

Did the company’s operating performance improve or deteriorate during 20X6?

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A1 Collins Decor, Inc. Comparative Income Statements Years Ended December 31, 20X6 and 20X5 20X6 $274,000 1 2 3 Net sales 4 Cost of goods sold 5 Gross profit 6 Selling and general expenses 7 Income from operations 8 Interest expense 9 Income before income tax 10 Income tax expense 11 Net income 12 20X5 $227,000 135,000 116,000 149,000 111,000 60,000 49,000 89,000 62,000 9,000 6,000 80,000 56,000 28,000 18,000 $ 52,000 $ 38,000